I remember the early days of the World Wide Web, better known as the World "Wild" Web, where advertisers were lining up to buy advertising spots on the Internet.  The Internet was supposed to be the new revolution.  Instead of having to pay millions of dollars for commercial spots on television, companies such as IBM, Dell, Compaq and many others were purchasing Internet advertising at *considerably* lower prices.

The first type of advertising to score big on the Internet was banner advertising.  These are the 460 x 200 banners that you usually see at majority of web sites.  Web sites such as Yahoo were charging upwards of $30 for every one thousand impressions at one time!

It was these advertising dollars that fueled the dot com craze in the early years of the Internet.  Companies were making huge revenues by selling banner ads on their sites, while the industry was enjoying click-thru percentages as high as ten percent.

But guess what?

The average Internet surfer's eyes started to become immune to these banner ads and click-thru percentages had dropped down close to only half of a percent.  Nobody is going to spend large sums of money to receive only five clicks for every one thousands impressions.

When the banner advertising market cracked, it was the downfall of many dot com companies.  Most of these companies had based their whole business plans on the advertising revenue model.

Basically the model worked like this:

A company would set up a content rich site on a particular topic and offer it to visitors for free.  They would then sell advertising spaces on these web sites to generate the revenues that they needed to stay in business.

Unfortunately these companies had not anticipated the collapse of banner advertising.  Either did the hoards of venture capitalists who were throwing millions of dollars at any teenager who had a great sounding idea written on lined piece of paper.

One prime example of a web site switching from free to fee is Britannica.com  At one time they were offering free access to their entire encyclopedia collection on the Internet.  Since then, they have come to their senses and now charge membership fees for access to their content.  They are now making a lot more money from membership fees rather than advertisers.

Many ezine publishers are starting to convert their newsletters into paid ezines.  Wayne Yeager who is the publisher of Trafficology ezine, built up his subscriber base from nothing to close to 25,000 readers by offering cash bribes to readers who could submit their best traffic ideas to his free ezine.

Wayne was thinking ahead of the game.   He decided to first build up his subscriber base and then convert his ezine into a paid ezine.  If only 500 people subscribe at $50 a year when he finally converts, he will be making over $50,000 a year!  I really don't know what Wayne will charge or how many readers he will get, but I have read his ezine and he will definitely have paid subscribers in the hundreds.

At the beginning of the New Year I will be attempting to convert one of my other ezines into a paid ezine.  That ezine is an entertainment-oriented publication that has close to 15,000 daily readers.  I did a demographic survey of my readers a few months back and seven percent of them indicated that they would be willing to pay to receive that publication.

With advertising revenues for this ezine publication at dismal numbers, converting it into a paid ezine at any price will be an immediate financial benefit.  I hope to sign up readers on a regular monthly billing cycle.  This will help create a residual income for myself and take the pain out of having to find advertisers to pay the expenses of running the publication.

The change in the ezine advertising industry has also forced me to start rewriting my ebook "EZ Money With Ezines" (available at http://www.ezmoneywithezines.com) and address the paid ezine issue.  Publishers are now realizing that people are willing to pay for their valuable content.  This version of the ebook should be available early next year.

My primary source of revenue from the Internet was selling advertising space in many of my various ezines.  Now that the ezine advertising market seems to be drying up I have now started concentrating on my secondary sources of revenues.

Terry Dean, who is an expert Internet marketer, talks about this very issue regarding ezine advertising and how it is on the decline.  He suggests that ezine publishers should not only rely on advertising dollars as their primary source of income anymore.
 

He also goes in depth detail about the *one* product he believes will always stay in demand and why every ezine publisher should be selling this type of product.

I highly recommend Terry's book "Digital Newsletter Publishing: Step-By-Step Guide to Creating Your Own Highly Profitable Online Membership Site", which comes as a bonus book when you purchase "The Paperless Newsletter."  The Paperless newsletter explains how any average Joe can start and run a paid ezine.  However, I personally feel that Terry's bonus book is worth a lot more.

You can order it by going to:

http://hop.clickbank.net/hop.cgi?gauher2/ebookspro

Advertisers are not taking the risks that they did in the past and are now demanding to see results for their advertising dollars.  This is why pay-per-click search engines have become immensely popular.  Advertisers only want to pay for actual clicks.

With the downturn in the economy, analysts are predicting that the advertising industry will not recover until 2003.  Internet marketers who rely on advertising revenues to stay afloat need to reassess their businesses and find new products or services.